Tom Lee explains his bullish stance that the Bitcoin price will reach $25,000 this use with three major factors.
Co-founder and Fundstrat strategist Tom Lee is holding to his prediction that Bitcoin (BTC) will reach $25,000, CNBC reports May 23. Lee identifies three key factors that make him believe the price will surge past the 2017 high.
On Wednesday, BTC dropped below $8,000 and traded around $7,500, losing most of the gains it made from mid-April to early May. With Wednesday's plunge, BTC is now down 41 percent this year. Lee believes the drop is only due to “typical crypto volatility”, and explains his bullish stance with three major factors.
The first key factor is the BTC production and replication costs. At the “Futures Now” show on CNBC on Tuesday, Lee said that BTC was “trading at cost”, because the price of production was almost equal to the trading price. Since, according to Lee, the cost production for BTC production was around $6,000 on Wednesday, it is still worth more than its mining cost.
Among the major factors which could trigger a possible price increase, Lee names institutional investors who, while interested in the crypto space, haven’t fully entered the industry due to regulatory uncertainties. He said:
"I think institutional investors have gained a lot of interest, and they haven't really come into crypto yet because there is still some regulatory uncertainty. But that sort of ultimate allocation into crypto as an asset class is going to be a powerful reason why Bitcoin rallies."
Lastly, data compiled by Fundstrat shows a historical trend, by which Lee recommends that investors hold on to their BTC. He said:
"Historically, 10 days comprise all the performance in any single year of Bitcoin's price. If you just took out those 10 days, Bitcoin's down 25 percent a year. So as miserable as it feels holding Bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days."
Earlier this month, Fundstrat Global Advisors revealed research placing the BTC price at $36,000 in 2019 based on historical averages. The analysis of the relation between BTC mining costs and price led analysts to predict the cryptocurrency’s range to be between $20,000 and $64,000 by the end of 2019. At press time, BTC is trading at $7,594.
Source: Cointelegraph https://cointelegraph.com/